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Papa John’s taps crisis PR firm to burnish CEO’s image

John Schnatter is a polarizing pizza maker. Or has he just been depicted that way?

You may remember the Papa John’s CEO from widely reported stories saying he planned to raise pizza prices and slash employee hours due to Obamacare. The alleged comments made Schnatter a villain to the political left and a hero to those on the right, some of whom led a “buycott,” urging people to frequent Papa John’s.

He inspired countless articles, op-eds, and TV rants, as well as aPR Daily story questioning whether joining the political fray is a wise move for companies.

Now Schnatter wants to make something perfectly clear: The reporting about him was either misconstrued or dead wrong. To help set the record straight, the CEO hired Sitrick and Co., a crisis PR firm that’s worked with a number of high-profile clients, including celebrities, corporations, and churches. The firm’s namesake CEO has been called the “king of crisis PR,” as well as the “wizard of spin.”

Schnatter “was tired of being mischaracterized,” Mike Sitrick, chairman and CEO of Sitrick and Co., told PR Daily. “It unfairly hurts his reputation, and he didn’t want it to bleed over into the brand.”

The firm’s efforts have paid off. Some news sites have modified their reporting on Papa John’s, and the firm helped land a mostly positive profile about Schnatter. However, Sitrick’s outreach in the blogosphere has caused backlash: At least one blogger has bristled publicly at the firm’s request to correct or remove a story. The incident thrust Sitrick into the spotlight this week.

What did he actually say?

The reporting about Schnatter’s opposition to Obamacare began in August, when he said, in a call to investors, that the health care overhaul could cost Papa John’s 11 to 14 cents per pizza. Most major media outlets reported that Papa John’s planned to raise its pizza prices due to Obamacare.

“The reporting was false,” Sitrick said. “The truth is he never said what was never attributed to him.”

What Schnatter actually said reveals the nuances—and complexity—of reporting and PR.

A transcript of the investor call shows the Papa John’s CEO did not say that his company planned to raise prices by 11 to 14 cents. That number represented the projected cost to the company, which Schnatter said Papa John’s was well positioned to absorb. Here’s a portion of the transcript of the call, as reported by Politico and confirmed by Sitrick:

“Our best estimate is that the Obamacare will cost 11 to 14 cents per pizza, or 15 to 20 cents per order from a corporate basis.

“We're not supportive of Obamacare, like most businesses in our industry. But our business model and unit economics are about as ideal as you can get for a food company to absorb Obamacare.”

However, Schnatter did suggest the company could pass any cost along to consumers. From the transcript:

“If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect our shareholders best interests.”

When asked about that comment, Sitrick urged that it not be taken out of context.

“It was very early in the process, and they were just trying to figure out what costs were,” he explained. “You can't take one sentence out of a lengthy answer out of context.”

The genesis of Schnatter’s claims that he would cut hours occurred after the election. He was speaking to a class at Edison State College when a reporter in the audience asked whether the CEO thought franchise owners would cut employee hours to make them part-time instead of full-time. The following exchange ensued:

Schnatter: “Well, in Hawaii there is a form of the same kind of health insurance, and that's what you do—you find loopholes to get around it. That's what they're going to do.”

Reporter: “My understanding is that if you're a full-time employee, which is 35 hours or over, you'd be covered. Or if you're part-time, then you wouldn't be. So wouldn't some business owners just cut people down to like 34 hours a week so they wouldn't have to pay for health insurance?”

Schnatter: “It's common sense. It's what I call lose/lose.”

That brief conservation led to a slew of headlines insisting Papa John’s might cut employee hours due to Obamacare.

“He didn’t say it—period.” Sitrick stressed. “He never said it.”

Setting the record straight

After Papa John’s hired the firm in mid-November, Sitrick persuaded Schnatter to write an op-ed for The Huffington Post about the reporting on his claims that Papa John’s had planned to cut employee hours. In the op-ed, Schnatter shared the transcript of his exchange with the reporter.

“The fact is we are going to open over hundreds of stores this year and next and increase employment by over 5,000 jobs worldwide,” he said in the op-ed. “And, we have no plans to cut team hours as a result of the Affordable Care Act.”

Meanwhile, Sitrick set about contacting blogs that published reports about Schnatter’s either cutting hours or raising pizza prices.

“When it comes up, our truth squad identifies who is publishing it and writes them a non-threatening letter, pointing out that it was wrong,” Sitrick explained.

According to Sitrick, nearly all the people who received the letter complied with the request and either corrected the record or took down their posts.

Will Stabley, of The Stabley Times, was among the bloggers to receive a letter after he published a post that pointed to a CNN story claiming Schnatter had lied about the cost of Obamacare to his company.

After the presidential election in November—around the time Papa John’s saw its reputation drop precipitously and its stock price dip—Schnatter sought advice on how to handle the negative press. The story about reducing employees had just broken, and it was gaining steam among late-night talk show hosts.
It led him to Sitrick, who encouraged Schnatter to speak up.

“I agreed that we need to respond,” Sitrick said. “[I told him] this isn’t going to stop. What you said is being mischaracterized.”

Sitrick said PR professionals need to confront inaccuracies in reporting, even if it’s in a blog of unknown readership.

“You can’t let it go, because the next thing you know it’s going viral again,” he said. “We call it whack-a-mole-ing.”

When asked whether he plans to contact larger media outlets, such as CNN, to ask them to adjust their reporting on Schnatter, Sitrick sounded hesitant.

“What am I going to say, you should correct your August story?” He said.

Moments later, however, he added: “I probably will—I’m going to advise him that we should probably write CNN.”